Legislature(2003 - 2004)
04/03/2003 08:03 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 161-CORRECTIONAL INDUSTRIES PROGRAM EXPENSES Number 2751 CHAIR WEYHRAUCH announced that the next order of business was HOUSE BILL NO. 161, "An Act allowing expenses of the correctional industries program that may be financed from the correctional industries fund to include the salaries and benefits of state employees." [In committee packets was a new proposed committee substitute (CS), Version D, labeled 23-GH1104\D, Luckhaupt, 4/2/03.] Number 2775 JERRY BURNETT, Director, Administrative Services, Department of Corrections, stated his understanding that the proposed Version D would make it easier for the correctional industries to make sales to private entities. He also noted that Version D would change the words "have minimal negative impact on" to "be of benefit to", as it pertains to judging whether a program works with private sector companies in the work force. He noted that Version D has an effective date of [July 1] 2004. MR. BURNETT stated that the department views the [proposed] changes as positive. He told the committee that the department does have some concerns regarding the effective date, because it doesn't allow the funding to pay state employee salaries in the next fiscal year; however, he said that the department is willing to work with the legislature on that issue. MR. BURNETT, in response to a question asked by Representative Berkowitz at a previous hearing on HB 161 regarding how much furniture the state buys, noted that in fiscal year 2002 (FY 02) the state bought $828,000-worth of furniture from the correctional industry, which equaled 96 percent of the revenue. To date in FY 03, the state has spent just over $300,000 on furniture, which is right on track with the amount [spent by] the same time last year. He commented that the majority of furniture purchases are made in May and June. Number 2869 REPRESENTATIVE BERKOWITZ asked what the comparable cost would have been if that furniture had been commercially purchased. MR. BURNETT replied that [finding the answer to that question] is one of the assignments that the department's internal auditor is working on presently. In response to a follow-up question, he said he believes that prison industry furniture is less expensive than commercially available furniture. He indicated that there are opportunities for change regarding pricing and marketing. REPRESENTATIVE BERKOWITZ said, "But that's not reflected in the fiscal note." MR. BURNETT said, "Right." Number 2900 CHAIR WEYHRAUCH noted that there is some concern from the private sector that it has to compete with the prison industry. He commented that there is a wage differential between the private sector and prison industries. MR. BURNETT responded as follows: Well, there is a correctional industries board which is required to make the finding. Currently, the correctional industries have minimal impact on the private sector. And, with the passage of this bill, you would have to make the finding that it would be of benefit to the private sector or to a labor force. For ... free venture cooperative arrangements with the Department of Corrections and prison industries, the requirement is that the ... private sector company who benefits from prison labor pays minimum wage to the department. And the difference between what the department receives and the actual payments to the inmates is used to offset program expenses. Number 2966 REPRESENTATIVE HOLM asked, "Did you not just say $828,000-worth of furniture was purchased locally, through this program?" MR. BURNETT indicated that [that was the amount] in FY 02. TAPE 03-36, SIDE B MR. BURNETT [listed some of the] system's plants. He mentioned wood furniture. REPRESENTATIVE HOLM said, "It seems like an awful lot of money to me. I don't know about you, but it's a lot more than I get on a yearly basis as a salary. So I just think that that's a significant number, so we need to be very cautious." He asked about the laundry business. MR. BURNETT said he does not have the figures for [the laundry business]; however, he noted that it generates a significant amount of income. Number 2944 REPRESENTATIVE BERKOWITZ said that Mr. Burnett had indicated at the last hearing on HB 161 that the commissioner is working on a plan to "manage this transition." He asked Mr. Burnett if he has that plan. MR. BURNETT answered no. He explained that it is in progress. He reminded the committee that he had mentioned at the last hearing that the current program manager is due to retire this month. He indicated that the department is determining "where to do the recruitment and how to do that." Number 2915 REPRESENTATIVE SEATON moved to adopt the proposed committee substitute (CS), Version 23-GH1104\D, Luckhaupt, 4/2/03, as a work draft. There being no objection, Version D was before the committee. Number 2900 REPRESENTATIVE BERKOWITZ noted that there are 2 employees for "each site," which totals 14 employees for 7 locations. MR. BURNETT said, "Right - approximately." REPRESENTATIVE BERKOWITZ stated that he would like to know what those individuals are doing, and what would happen to the revenue that the state is generating if those individuals were not employed. MR. BURNETT responded that [those are] good questions that will be included in the department's [considerations]. REPRESENTATIVE BERKOWITZ said, "It seems to me that that's something that we're looking at right now, and that if this legislation is before us, the appropriate time for us to look at it is right now." MR. BURNETT said, "Right." In response to a follow-up comment by Representative Berkowitz, he reminded the committee that he had stated at the previous hearing on HB 161 that it is not the intent of the department to eliminate "these programs or these positions." REPRESENTATIVE BERKOWITZ stated, "That seems the consequence of moving forward with this legislation when there's no plan in place." He said that perhaps the legislation might be good; however, it seems premature to bring it before the committee without being able to provide the answers to the legitimate policy questions that are being raised by the committee. Number 2837 REPRESENTATIVE SEATON said that he still does not see what he had hoped for in the proposed legislation. He noted that his concern relates to the budget. He remarked that the way that [Version D] reads, if the program does not increase its revenue sufficiently to be able to pay the salaries, there is no other source identified for those salaries. The result, he noted, would be that prison industries would disappear because there would be no managers. Therefore, he said, if it is not the intent of the administration to only fund salaries and benefits to state employees out of this program, with no fallback position for maintaining that funding, then he would like to see the committee offer a letter of intent that it is passing the legislation along, only with the intention that the administration will maintain the program. Furthermore, the administration may use any revenues for salaries and benefits, but it will not, for lack of those revenues from this program, terminate the program. Number 2759 CHAIR WEYHRAUCH asked Representative Seaton to draft a letter of intent for the committee to include with the bill and fiscal note before moving the proposed legislation out of committee at the next hearing on HB 161. REPRESENTATIVE BERKOWITZ stated that [regardless of the letter of intent] he will object [to moving the legislation out of committee] if there is not a plan in place by [DOC]. He opined: It seems precipitous of us to be making policy decisions when the administration hasn't brought forward to us adequate information to make good decisions. I realize this is a transitional period - there's a new administration [and a] steep learning curve - but when ideas are presented, they ought to be presented in such a way that the legislature has the information necessary to make quality decisions on them, whether we agree or disagree. Number 2734 CHAIR WEYHRAUCH told Mr. Burnett that it would be beneficial to the committee if he would include in the letter of intent any of his statements regarding the administration's planning process. CHAIR WEYHRAUCH announced that HB 161 would be held over.
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